Predominant position at Frankfurt and Munich hubs and above-average exposure to profitable long-haul business Valued brand and good exposure to high-yield premium traffic Leading European player in transport of cargo and maintenance, repair, and overhaul (MRO), which provides some diversification Very healthy liquidity and consistent free cash flows Participation in cyclical, price-competitive, and capital-intensive airline industry Dramatic rise in crude oil prices constrains profitability Decentralized home market, which increases pressure from low-cost carriers in domestic and European markets The ratings on Germany-based aviation group Deutsche Lufthansa AG are supported by its dominant market positions, improving operating performance, and healthy balance-sheet structure. The ratings are constrained by the high-risk and cyclical airline industry, sharp increase in fuel costs, and aggressive competition
